5 Sales Tax Questions Retailers Should Examine

Are you getting the most out of your technology? "Effective technology is particularly important in the retail sector where product lists range in the thousands and sales are made to numerous jurisdictions."

Have you evaluated the impact of sales tax on your bottom line? "Businesses place significant emphasis on minimizing their “effective tax rate.” While that is very important, the focus on sales tax should arguably receive equal attention. In the absence of an exemption or other exception, sales tax generally equates to 6 to 9 percent of every transaction, so it is critical to get it right."

Is your sales tax registration an afterthought? "If your business has sales tax nexus and will have taxable transactions in the customer’s state, the state will require an active sales and use tax license before the first sale."

How will a sales tax holiday affect your business? "While the sales tax holiday is intended to encourage shopping for the retail industry, it requires some planning and preparation that can be burdensome. For retailers managing thousands of products in multiple taxing jurisdictions, they must ensure they are excluding sales tax from the items eligible for the holiday. Unfortunately, there is no consistency across the states, so each state requires special consideration and adjustment within the retailer’s systems."

What is the impact of loyalty and rewards program on sales tax? "Many retailers offer new and existing customers various rewards in the form of points, automatic discounts, rebates or coupons. However, not all businesses proactively consider the sales tax implications for when a customer redeems these earned rewards."

Vertex Cloud is the perfect solution for small and medium-sized businesses. It offers a cloud-based sales and use tax automation solution designed to save time, effort, and risk associated with calculation, return, remittance, and compliance.